Five signs of small business identity theft, new protection methods

Small business identity theft is a big business. Just like individuals, businesses can be victims too. Thieves use a business’s information to file fake tax returns or get credit cards.

Identity thieves are more sophisticated than they used to be. They know the tax code and filing practices and how to get valuable data. The IRS has seen a sharp increase in fraudulent business tax forms. These include Forms 1120, 1120S and 1041, as well as Schedule K-1. These affect business, partnership, estate and trust filers.

Signs of identity theft

Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:

The IRS rejects an e-filed return saying it already has one with that identification number.

The IRS rejects an extension to file request saying it already has a return with that identification number.

The filer receives an unexpected tax transcript.

The filer receives an IRS notice that doesn’t relate to anything they submitted.

The filer doesn’t receive expected or routine mailings from the IRS.

New procedures to protect businesses in 2018

The IRS, state tax agencies and software providers have ways to detect suspicious returns. However, some new measures can help validate returns in advance. The IRS and states are asking businesses and tax professionals to help verify if a tax return is legitimate. These procedures are new for 2018. Software for business tax returns will ask questions related to: